Are Church Donations Tax Deductible?

Churches' donation
Advertiser Disclosure: TheWitness.org earns commissions from qualifying purchases.

Taxpayers can deduct the money they give to religious organizations on their federal returns. But the question is, are church donations tax-deductible? There are conditions involved. You must give to a non-profit religious or educational organization to claim a tax deduction. If you itemize your deductions, you can normally claim 100% of your church donations as a deduction. Let’s explore more on the subject in this article.

Are Church Donations Tax Deductible?

When you submit your personal tax return, you can deduct the money you give to your church. If your itemized deductions total is more than the standard deduction for your filing status, you can utilize Schedule A to file your taxes. Church gifts are not tax-deductible if the standard deduction is more advantageous. If you want to itemize deductions, you can deduct those donations in any of the next five tax years in which you do so.

Why Is Itemizing Deductions Important?

The Consolidated Appropriations Act (CAA) was brought into law on December 27, 2020, to help individuals impacted by the pandemic. Taxpayers who use the standard deduction and make qualifying cash contributions of up to $300 can deduct such contributions without itemizing. This rose to $600 in 2021 for taxpayers filing jointly as a married couple.

If you itemize your tax deductions on Schedule A of the IRS, you can only deduct a donation to a religious organization from your taxes. This drastically restricts the real group of people who can receive such deductions.

You can deduct certain expenses from your taxable income each year, such as property taxes, mortgage payments, income taxes, certain medical expenses, and even losses from accidents and theft. The Internal Revenue Service (IRS) sets the standard deduction for individual taxpayers each year.

What Happens to Those Who Don’t Itemize Deductions?

Itemizing deductions is only necessary for those whose total itemized deductions exceed the average deduction amount. Non-itemizers don’t obtain a tax break for charity donations. Charitable gifts are pointless for those who don’t get their deductions itemized. Some non-itemizers’ charity contributions have failed to be deductible by Congress.

Even though all charitable donations are deductible in theory, few taxpayers claim a deduction. This is even more tangible now than before because of the TCJA, which nearly doubled the average deduction.

Your church donations are tax-deductible; however, there are some conditions. Similar assertions made by churches in their fundraising efforts are misleading. Therefore, the more accurate statement will be, that your church donations can be deductible on the tax return.

You Must Document Your Donations

You must also keep track of the money you have donated. Tax deductions can’t be claimed without documented proof of a donation. Regardless of how little you contribute each week, you are expected to keep tabs on the money.

The amount and type of documents required vary according to the donation. Those who donate under $250 require documentation stating the date, donor’s name, and amount of donation. You can rely on your records, such as bank statements, to prove that you have made the payment. The donation’s bank record will not be kept if you provide cash. Therefore, you’ll require a written confirmation from your church. Any letter, receipt, or another type of paper is acceptable given that it has all the necessary details.

On the other hand, an official church receipt is required for any donation of more than $250. The written acknowledgement must include the date, name of the church, the amount of donation, and a statement that no goods or services were supplied by the church in return for your contribution.

However, you do not need to provide this paperwork to file your taxes. Audits by the Internal Revenue Service might question your deductions, though; therefore, you must have this information on hand. Remember that losing valuable deductions due to incomplete or incorrect documentation is a recurring problem. If you want to avoid this mishap, you should keep your documents completed.

Church Donations are Subject to Yearly Cap

The amount of money you give to your church and other charitable organizations can’t exceed 60% of your Adjusted Gross Income (AGI). You might not be able to deduct all of your charitable contributions in the current tax year. However, if you are unable to deduct any of these sums this year, you may be able to deduct them in one of the next five tax years.

Donating Money to a Religious Organization

Donations to a church come with various record-keeping and paperwork obligations from the Internal Revenue Service (IRS). Donations made with cash must be accompanied by a donation receipt, a cancelled check, or a bank or credit card statement. There’s no requirement that you provide this data to the IRS; however, you’ll be compelled to provide it if the agency ever asks for the proof.

It is also necessary to receive formal confirmation from the church if the donation is more than $250. If you received anything in return for your donation, you’d have to provide a description of it in a letter and a declaration to the effect that the only benefit you receive is a spiritual one. If you receive something in return, you must deduct the value of that thing from your deductible.

Donating a Property to a Religious Organization

Tax regulations require you to determine the property’s fair market value before donating it to a church. A credible estimate of a buyer’s price for a similar property on the open market can be obtained using any valuation method. Presenting your estimate without any expertise is unacceptable. You can deduct 100 percent of the cost as long as your estimate is fair.

Our Final Thoughts

And there’s your answer to “Are church donations tax-deductible?” It is tax-deductible to give to charity, and the IRS also considers church money to be tax-deductible. You can deduct the tax you give to your church or place of worship by reporting your charitable contributions.